Sapeet Inc. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥996M
• Operating Income: ¥55M
• Net Income: ¥70M
• EPS: ¥45.25

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: FY2025 Q4 results point to a solid topline-driven recovery with improving profitability, but cash conversion and reliance on non-recurring items temper the quality of earnings. Revenue rose 56.9% YoY to 9.96, evidencing strong demand or successful scaling of the business model. Operating income increased 48.6% YoY to 0.55, implying an operating margin of roughly 5.5% this period. Ordinary income climbed 83.4% YoY to 0.45, yet profit before tax was reported at -0.29, while net income printed at 0.70, indicating the presence of significant extraordinary gains under JGAAP (not disclosed in detail). Gross margin stands at 38.4%, and EBITDA margin at 6.4%, demonstrating decent unit economics for a company at this scale. ROE is a healthy 14.1% (DuPont: 7.0% net margin × 1.668x asset turnover × 1.20x leverage), supported by strong asset turnover and modest leverage. ROIC is reported at 11.5%, above the 7–8% benchmark and signaling value-creating investment deployment. The OCF/Net Income ratio is 0.64x (below the 0.8 threshold), flagging weaker cash realization relative to reported profit. Free cash flow was negative at -0.57, driven by -1.02 in investing CF (vs. capex of -0.10), suggesting growth investments (likely intangible) beyond routine capex. Liquidity is adequate but not robust: current ratio of 116% and quick ratio of 116%, with short-term loans of 2.00 comprising the bulk of liabilities (2.84). Leverage is moderate with D/E at 0.57x and interest coverage at 13.06x, indicating manageable financial risk at present. Retained earnings remain negative (-2.98), constraining future dividend capacity despite current profitability. Margin trajectory cannot be precisely quantified in basis points due to lack of prior period margin disclosures; however, operating income growth lagged revenue growth, implying slight operating margin compression YoY. Earnings quality is mixed, with probable one-time gains lifting net income above pre-tax profit and OCF trailing NI. Forward-looking, sustaining double-digit ROE/ROIC hinges on converting profit into cash, reducing reliance on short-term debt rollovers, and demonstrating that the extraordinary items do not mask underlying volatility.

Profitability Analysis

ROE decomposition (DuPont): ROE 14.1% = Net Profit Margin (7.0%) × Asset Turnover (1.668) × Financial Leverage (1.20x). The largest contributor is high asset turnover (1.668), reflecting efficient use of a small asset base to drive revenue. Net margin improved at the earnings line but is complicated by extraordinary items, as PBT was negative (-0.29) while NI was positive (0.70), signaling non-recurring gains boosted the bottom line. Financial leverage remains modest at 1.20x, providing some lift without excessive balance sheet risk. The most notable change versus revenue growth appears to be operating leverage not fully materializing—operating income grew 48.6% vs revenue up 56.9%, indicating SG&A or cost creep limited incremental margin expansion. Business reason: scale-up costs and higher SG&A to support growth (specific SG&A line items not disclosed) and possibly increased non-operating expenses (0.10) relative to a small base. Sustainability: asset turnover is likely sustainable if growth persists; however, the net margin uplift from extraordinary gains is one-time by nature and should not be extrapolated. Concerning trends: implied SG&A growth likely exceeded revenue growth on a per-margin basis, capping operating margin improvement; also, reported operating margin in XBRL (0.1%) appears inconsistent with calculated ~5.5%, suggesting data definition differences—use calculated measures for analysis.

Growth Assessment

Revenue growth of 56.9% YoY to 9.96 indicates strong demand momentum and/or increased customer acquisition/expansion. Operating profit growth of 48.6% lagging revenue suggests limited operating leverage this period. Ordinary income rose 83.4%, but the negative PBT vs positive NI implies one-off gains at the extraordinary level under JGAAP; core growth should therefore be gauged at the operating line. Gross margin of 38.4% and EBITDA margin of 6.4% indicate improving scale economics but still in early maturation. ROIC at 11.5% surpasses a typical 7–8% target, supportive of value creation if maintained. With OCF at 0.45 vs NI at 0.70, cash realization trails reported earnings, pointing to working capital or non-cash effects; durability of growth will depend on improving cash conversion. Investing CF of -1.02 (vs capex -0.10) suggests strategic investments, likely intangibles or acquisitions, supporting future growth but pressuring near-term FCF. Outlook hinges on stabilizing margins without relying on extraordinary items and on scaling OCF to fund growth internally.

Financial Health

Liquidity: Current ratio 116.2% and quick ratio 116.2%—adequate but below the >150% comfort benchmark. No explicit warning for current ratio <1.0 (company is above). Working capital stands at 0.46. Maturity profile: current liabilities of 2.84 are fully short-term; short-term loans constitute 2.00, indicating reliance on short-term funding that requires rollover; however, cash and deposits of 2.20 provide a direct liquidity backstop. Solvency: D/E 0.57x is conservative; interest coverage at 13.06x is strong. Total assets 5.97 with equity 4.98 implies low leverage overall (financial leverage 1.20x). Retained earnings are negative (-2.98), signaling accumulated deficits and limited distributable reserves. No off-balance sheet obligations disclosed; data limitations prevent assessment of lease liabilities or contingent obligations. Overall, balance sheet resilience is acceptable for size, with a caution on short-term debt concentration.

Cash Flow Quality

OCF/Net Income at 0.64x is below the 0.8 threshold, indicating weaker cash conversion and elevating earnings quality risk. Free cash flow was -0.57 due to investing CF of -1.02 outpacing OCF, despite modest capex (-0.10), implying investments beyond routine PP&E (likely intangibles or equity-type investments). Interest expense is low (0.04) relative to EBITDA (0.64), aligning with strong coverage, but OCF shortfall versus NI suggests working capital build or non-cash gains contributing to accounting profit. No explicit signs of working capital manipulation from disclosed data; however, reliance on extraordinary income to bridge PBT to NI weakens quality. Sustainability: Without improvement in OCF, continued investment will depend on external financing or cash reserves.

Dividend Sustainability

No dividends are reported (DPS N/A), and payout ratios are not calculable. Given negative retained earnings (-2.98) and negative FCF (-0.57), the capacity to initiate or increase dividends appears constrained under JGAAP capital policy norms. If a dividend policy were contemplated, it would likely require sustained positive FCF and reversal of the accumulated deficit. Current financing CF of 0.49 suggests external funding supports investments rather than distributions.

Risk Assessment

Business Risks:

• Earnings dependence on non-recurring items under JGAAP (NI positive despite negative PBT).
• Scaling risk: SG&A pressure limiting operating leverage as revenue grows.
• Product/market concentration risk typical for small-scale firms (not disclosed but implied by size).
• Execution risk in monetizing recent investments (Investing CF -1.02) to achieve ROIC > WACC.

Financial Risks:

• Liquidity reliance on short-term loans (2.00) with full current liabilities at 2.84.
• OCF/NI at 0.64x indicating weaker cash realization and potential funding gaps.
• Negative retained earnings (-2.98) limiting financial flexibility for dividends and buybacks.
• Potential volatility in extraordinary items affecting bottom-line visibility.

Key Concerns:

• Quality of earnings due to discrepancy between PBT (-0.29) and NI (0.70).
• Sustainability of ROE 14.1% if extraordinary gains normalize.
• Negative FCF (-0.57) amid continued investment needs.
• Thin liquidity buffer (current ratio 116%) against concentrated short-term debt.

Investment Implications

Key Takeaways:

• Robust revenue growth (+56.9% YoY) with improving profitability at the operating level.
• Healthy ROE (14.1%) and ROIC (11.5%) driven by strong asset turnover and modest leverage.
• Earnings quality mixed: OCF/NI 0.64x and NI uplifted by non-operating/extraordinary factors.
• Liquidity adequate but reliant on short-term borrowings; cash (2.20) offsets much of ST debt (2.00).
• Negative retained earnings constrain capital return optionality despite current profits.
• Negative FCF reflects growth investment; internal funding capacity needs improvement.

Metrics to Watch:

• Operating cash flow versus net income (target OCF/NI > 1.0).
• Operating margin trajectory (aiming for sustained expansion from ~5.5%).
• Working capital trends, especially receivables and payables turns.
• Composition of non-operating and extraordinary items under JGAAP.
• Short-term debt rollover and cash balance sufficiency.
• ROIC versus WACC to validate value creation from recent investments.

Relative Positioning: Within small-cap growth peers, Sapeet shows stronger asset turnover and ROIC but weaker cash conversion and higher dependence on short-term funding; visibility is hampered by undisclosed line items and extraordinary gains.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis